How to best use cash while travelling abroad

Apr 9, 2022

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We talk a lot about using cards here at TPG U.K. — both credit cards that can earn valuable travel rewards and travel debit cards that can help you avoid foreign transaction fees.

If you are paying the bill at a large five-star hotel, you will probably be able to pay by card. But there are plenty of situations when travelling that using cash is unavoidable. Tipping a bartender, buying a drink from a corner shop or a meal at a small, rural family-run restaurant are all situations that may all need physical cash.

So here are some tips for using cash while travelling.

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Wait until you reach your destination to exchange cash

You may have seen cash machines at U.K. airports offering cash in multiple currencies. Convenient, right? You will pay dearly for that convenience.

The machine will either impose fees for withdrawals in foreign currencies (whereas you’ll be able to withdraw pound sterling at no cost at most U.K. high street cash machines), or more likely give you an awful rate — think 100 euro for £100. Similarly, those currency exchange booths located conveniently airside at U.K. airports while you wait for your flight will also give a below-market rate for your cash.

You will usually receive a better rate if you wait until you arrive at your destination to physically exchange foreign currency for local currency.

Related: How to avoid hidden costs when travelling

If you're taking out cash while you're traveling, try to avoid costly ATM fees.(Photo credit should read BORIS HORVAT/AFP/Getty Images)
(Photo by HORVAT/AFP/Getty Images)

Shop around

Like shopping around for souvenirs or duty-free alcohol, you might find slightly different rates for the same currency exchanges depending on the location or retailer. If you’re in the arrivals hall of an airport and need to exchange cash to pay for a taxi into town and there are multiple currency exchange booths, it’s worth spending a few minutes quickly comparing their rates. They may be very similar, but the difference between one booth offering even 1% higher can be worth checking — especially if you are exchanging a large amount.

Ensure you are comparing like-for-like — one booth offering a surprisingly good rate might be slugging you with a large transaction fee while the other, slightly higher rate may be fee-free.

Related: Where’s the cheapest duty free? We checked 50 airports to find out

Have enough, but not too much cash on you

Should you take enough cash with you for the whole trip and exchange it at the destination for the best rate? While this would avoid foreign cash machine fees, the more cash you are carrying with you, the greater the risk something could happen to it. I would not recommend a big night out on the town with £500 (or the local equivalent) in cash in your wallet. This isn’t smart travelling. Using hotel safes can help to keep the money more secure.

You want to have enough money on you for what you need, but not so much that it becomes a liability. I would generally keep enough cash to last a couple of days of incidentals (that I cannot use my card for). I would not keep a week’s cash in my pocket — I don’t need it all there and then, so don’t want to risk something happening to it.

(Photo by baona/Getty Images)
(Photo by baona/Getty Images)

Be aware of cash machine fees

This is where it can get tricky. You may have a card that allows cash withdrawals abroad where your card issuer may not charge a cash withdrawal fee. It is critical to know if you will still be charged a fee by the cash machine operator itself. Most foreign cash machines will charge a fee for withdrawing cash. In Thailand, for example, you could be looking at a fee as much as £6 per withdrawal.

Some travel and debit card operators may waive/absorb this fee as part of its product offering, though many will pass this on to the cardholder.

The best way to check is in the fees and charges section of your card’s terms and conditions. If there is wording along the lines of “we do not charge fees of our own, however, you may be charged a fee by the cash issuer”, that means there could be a substantial fee each time you withdraw cash. If there is, this is likely to be a fixed fee per withdrawal, rather than based on the percentage of cash you withdraw. In this case, it may save to either bring cash in your home currency with you (to exchange at your destination) or make less frequent, larger withdrawals to reduce the fees you are paying.

Liquidate your coins

If you do end up with cash at the end of your trip, you can usually exchange it back to pound sterling or another currency if you are travelling on to somewhere else. However, currency exchangers will usually not accept coins and deal in notes only. If you end up with a handful of foreign coins at the end of a trip, try and use them up — it can be a good use to purchase a small souvenir or snack at an airport as you are leaving the country rather than getting home, not being able to use them and then they sit in a drawer forever.

Related: How to avoid the most elaborate travel scam I’ve ever seen

New 12-sided £1 and 1 Euro coins on a credit card with a new £5 note, £20 note, 10 Euro note in Liverpool as the new pound coin entered circulation - with early teething problems expected at coin-operated machines across the country. (Photo by Peter Byrne/PA Images via Getty Images)
(Photo by Peter Byrne/PA Images/Getty Images)

Try and use cards where you can

Though this guide is about using physical cash, it’s worth noting that there are many benefits to using cards overseas where possible. It’s worth asking at places like restaurants if you can pay by card, even if it isn’t obvious if you can.

Cards are convenient — you don’t have to worry about exchange rates or the safety of carrying big wads of cash with you. You can avoid fees and maybe even earn rewards. Always select to pay in local currency if using a card to get a market rate. Choosing your home currency will give you a worse rate.

Related: What is dynamic currency conversion and why should you avoid It?

And then… use a fee-less credit card and earn points in the process

Thanks to Brexit, some European banks are beginning to charge Brits extortionate fees to use their ATMs. While circumnavigating the dreaded ATM fee is tricky, you avoid cash altogether by sticking to direct purchases using a credit card that doesn’t charge a foreign transaction fee.

Virgin Money is one, and no longer charges this fee for purchases in the European Economic Area – which covers 30 countries from Austria to Sweden.

This means you can use this card (and its no-annual-fee Virgin Atlantic Reward Credit Card version) when you’re in most of mainland Europe and earn points without incurring a fee. Best of all, you’ll earn a generous 1.5 Virgin Atlantic Flying Club miles per £1 or foreign currency equivalent spent.

You can read a full review of this card here.

Find a bank that doesn’t charge for foreign debit card transactions

If you prefer to use a debit card — though it’s worth noting you won’t earn any rewards on transactions — the Starling Bank Debit Card is also a good bet. Just remember that you’ll need to make sure to transfer sufficient funds onto the card before you travel.

Related: The Battle of the Travel Debit Cards: Revolut vs. Monzo vs. Starling vs. N26 vs. Curve

You can read a review of the Starling Bank card, as well as some of the other innovative travel debit cards available right now, here.

There are also ways to avoid extra charges on money transfers, such as signing up to a ‘borderless’ international money account such as Wise whenever sending money to foreign accounts that have imposed extra tariffs on UK-registered cards.

Bottom line

Cash can be a frustrating but necessary evil of travelling. At some destinations, you can use cards instead but there are many places, especially in developing areas, where cash is still king. There are costs and complications involved which are part of travelling, but with these tips, you should be able to minimise them.

Featured photo by Getty/Pakin Songmor.

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